Filed May 4, 2007--Opinion by Judge Paul Grimm
In an action brought to enforce a private arbitrator’s award for damage to a yacht, the court determined that the motion by the boat owners was properly considered as a motion to modify the award under the Federal Arbitration Act, while the motion by the insurance company sought to enforce the award rather than have it increased as requested by the boat owners. The court denied both motions without prejudice because counsel for both sides had failed to establish the authenticity of their exhibits, to resolve potential hearsay issues, to comply with the original writing rule, and to demonstrate the absence of unfair prejudice to the extent that their exhibits were inadmissible.
In its 101 page opinion, the court dedicated at least 90 pages to providing extensive and detailed analysis and guidance on the interrelated evidentiary issues governing the admissibility of electronically stored evidence (ESI), including: analysis under Rule 104, relevance under Rule 401, authentication as required by Rule 901(a), effect of hearsay as defined by Rule 801 and any applicable exceptions, consideration of the form of the ESI being offered under the original writing rule and the admissibility of any secondary evidence to prove its content, and the probative value of the ESI considering potential unfair prejudice or one of the other factors identified by Rule 403.
The full opinion is available in PDF.
Showing posts with label arbitration. Show all posts
Showing posts with label arbitration. Show all posts
Tuesday, May 8, 2007
Tuesday, April 24, 2007
Erachem Comilog, Inc. v. [United Steel Workers Union] (Maryland U.S.D.C.) (Not approved for publication)
Signed April 19, 2007. Memorandum and Order by Judge Catherine C. Blake (not approved for publication).
On consideration of a claim by the plaintiff ("Erachem") to vacate an arbitration award entered in favor of United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL-CIO-CLC Local 12517-04 (the "Union"), and the Union's counterclaim to affirm the award, the judge DENIED Erachem's motion, and GRANTED the Union's motion.
A member of the Union ("Cavey") was discharged by his employer, Erachem, for allegedly misrepresenting his physical condition following a knee injury at work. Pursuant to the provisions of the Union's Collective Bargaining Agreement with Erachem, the discharge decision was eventually taken to arbitration, where the arbitrator found that Erachem failed to prove it had just cause to discharge Cavey, and ordered his reinstatement.
Noting that its review of an arbitral award was "among the narrowest known to the law", the judge affirmed the arbitrator's decision, finding that the arbitrator's consideration of the unemployment and worker's compensation awards in Cavey's favor was not erroneous and only part of the support cited for the decision, nor did the discussion of Cavey's Weingarten rights, even if in error, did not form the basis for the decision and award. In sum, the judge found that Erachem had not met its "exacting burden" of showing the arbitrator had "dispensed his own brand of justice" in granting the award, and affirmed.
The Memorandum and Order are available in PDF format.
On consideration of a claim by the plaintiff ("Erachem") to vacate an arbitration award entered in favor of United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL-CIO-CLC Local 12517-04 (the "Union"), and the Union's counterclaim to affirm the award, the judge DENIED Erachem's motion, and GRANTED the Union's motion.
A member of the Union ("Cavey") was discharged by his employer, Erachem, for allegedly misrepresenting his physical condition following a knee injury at work. Pursuant to the provisions of the Union's Collective Bargaining Agreement with Erachem, the discharge decision was eventually taken to arbitration, where the arbitrator found that Erachem failed to prove it had just cause to discharge Cavey, and ordered his reinstatement.
Noting that its review of an arbitral award was "among the narrowest known to the law", the judge affirmed the arbitrator's decision, finding that the arbitrator's consideration of the unemployment and worker's compensation awards in Cavey's favor was not erroneous and only part of the support cited for the decision, nor did the discussion of Cavey's Weingarten rights, even if in error, did not form the basis for the decision and award. In sum, the judge found that Erachem had not met its "exacting burden" of showing the arbitrator had "dispensed his own brand of justice" in granting the award, and affirmed.
The Memorandum and Order are available in PDF format.
Tuesday, March 20, 2007
Koons Ford of Baltimore, Inc. v. Lobach (Ct. of Appeals)
Filed March 20, 2007--Opinion by Judge Clayton Greene (JJ Raker and Harrell dissenting).
The Lobachs purchased a vehicle from Koons Ford and, after discovering defects in the vehicle, filed a complaint against Koons alleging, inter alia, that Koons violated the Magnuson-Moss Warranty Act ("MMWA"), the Maryland Consumer Protection Act ("MCPA"), breach of contract, violation of the Maryland Commercial Law Code, fraud, and a derivative action against Suntrust Bank for all of the aforementioned claims. Koons responded with a Petition for Order to Arbitrate and Dismissal of Complaint. Koons maintained that the claim had to be submitted to binding arbitration because, as part of the purchase, the Lobachs signed a buyer's order that contained a binding arbitration clause, and arbitration is expressly favored by the Federal Arbitration Act ("FAA"). The Lobachs argued the MMWA prohibits the forced resolution of claims through binding arbitration and, therefore, the FAA does not apply. The Lobachs further maintained that the arbitration clause must be included in the warranty document to be enforceable under the single document rule.
This Court rejected the Lobach's claim that they had no notice of the binding arbitration provision or that they were foregoing their ability to bring a civil suit. The applicable language was clear and comprehensible and appeared in the buyer's order in capital letters and bold print. Because the Lobachs signed their names below the arbitration provision, attesting to their understanding of what they read, the Court held that they may not evade their obligations simply because they choose to not read what they had signed.
Another provision in the buyer's order provided in relevant part, "NOR SHALL ANYTHING HEREIN BE CONSTRUED TO LIMIT ANY REMEDIES UNDER . . . THE MAGNUSON MOSS ACT." The Court interpreted this provision to mean that the Lobachs may not be precluded from pursuing claims for breach of warranty in a court of law. However, although the MMWA allows for non-binding, as opposed to binding, arbitration, the next issue is to determine whether the FAA trumps the MMWA and whether the binding arbitration provision contained in the buyer's order is nonetheless enforceable.
The Court rejected Koon's interpretation of the MMWA and agreed with the Lobach's contention that Congress expressed an intent to preclude binding arbitration of claims under the MMWA, a conclusion which is further supported by the FTC regulations. The language of 15 U.S.C. § 2310 makes clear that the warrantor may establish informal dispute settlement mechanisms that consumers must use to resolve their claims under the MMWA, but that consumers cannot be forced to resolve their claims through an informal dispute resolution mechanism that is binding. Consumers may be required by warrantors to participate in a non-binding informal dispute settlement mechanism, but only as a prerequisite; afterwards, consumers may pursue other legal remedies.
This Court held that, under the MMWA, claimants may not be forced to resolve their claims through binding arbitration because Congress expressed an intent to preclude binding arbitration when it enacted the MMWA. The FAA does not supersede the MMWA. Because of the resolution of this case, the Court did not address the parties' dispute over the single document rule.
The full opinion is available in PDF.
The Lobachs purchased a vehicle from Koons Ford and, after discovering defects in the vehicle, filed a complaint against Koons alleging, inter alia, that Koons violated the Magnuson-Moss Warranty Act ("MMWA"), the Maryland Consumer Protection Act ("MCPA"), breach of contract, violation of the Maryland Commercial Law Code, fraud, and a derivative action against Suntrust Bank for all of the aforementioned claims. Koons responded with a Petition for Order to Arbitrate and Dismissal of Complaint. Koons maintained that the claim had to be submitted to binding arbitration because, as part of the purchase, the Lobachs signed a buyer's order that contained a binding arbitration clause, and arbitration is expressly favored by the Federal Arbitration Act ("FAA"). The Lobachs argued the MMWA prohibits the forced resolution of claims through binding arbitration and, therefore, the FAA does not apply. The Lobachs further maintained that the arbitration clause must be included in the warranty document to be enforceable under the single document rule.
This Court rejected the Lobach's claim that they had no notice of the binding arbitration provision or that they were foregoing their ability to bring a civil suit. The applicable language was clear and comprehensible and appeared in the buyer's order in capital letters and bold print. Because the Lobachs signed their names below the arbitration provision, attesting to their understanding of what they read, the Court held that they may not evade their obligations simply because they choose to not read what they had signed.
Another provision in the buyer's order provided in relevant part, "NOR SHALL ANYTHING HEREIN BE CONSTRUED TO LIMIT ANY REMEDIES UNDER . . . THE MAGNUSON MOSS ACT." The Court interpreted this provision to mean that the Lobachs may not be precluded from pursuing claims for breach of warranty in a court of law. However, although the MMWA allows for non-binding, as opposed to binding, arbitration, the next issue is to determine whether the FAA trumps the MMWA and whether the binding arbitration provision contained in the buyer's order is nonetheless enforceable.
The Court rejected Koon's interpretation of the MMWA and agreed with the Lobach's contention that Congress expressed an intent to preclude binding arbitration of claims under the MMWA, a conclusion which is further supported by the FTC regulations. The language of 15 U.S.C. § 2310 makes clear that the warrantor may establish informal dispute settlement mechanisms that consumers must use to resolve their claims under the MMWA, but that consumers cannot be forced to resolve their claims through an informal dispute resolution mechanism that is binding. Consumers may be required by warrantors to participate in a non-binding informal dispute settlement mechanism, but only as a prerequisite; afterwards, consumers may pursue other legal remedies.
This Court held that, under the MMWA, claimants may not be forced to resolve their claims through binding arbitration because Congress expressed an intent to preclude binding arbitration when it enacted the MMWA. The FAA does not supersede the MMWA. Because of the resolution of this case, the Court did not address the parties' dispute over the single document rule.
The full opinion is available in PDF.
Thursday, March 15, 2007
Doyle v. Finance America LLC (Ct. of Special Appeals)
Filed March 15, 2007 – Opinion by Judge Raymond Thieme
Appellants, Richard A. Doyle and Ruth M. Doyle, sued Finance America, LLC, to recover the interest associated with a mortgage loan, which was disbursed one day late. On the day scheduled for settlement, the Doyles had signed a Dispute Resolution Agreement stating in part that "any dispute, regardless of when it arose, shall be resolved, at your option or ours, by arbitration in accordance with this agreement." The Doyles sued in circuit court to recover damages, on behalf of a putative class. Finance America filed a motion to dismiss and motion to compel arbitration, which were granted by the circuit court.
Among other things, the Doyles contended that arbitration should not have been mandatory because a condition precedent had not been met, because theirs was a class action suit and such suits were excluded from the agreement, because arbitration was permissive rather than mandatory, and because the agreement was unenforceable as procedurally and substantively unconscionable.
The Court of Special Appeals disagreed and affirmed the decision of the circuit court.
The opinion is available in PDF.
Appellants, Richard A. Doyle and Ruth M. Doyle, sued Finance America, LLC, to recover the interest associated with a mortgage loan, which was disbursed one day late. On the day scheduled for settlement, the Doyles had signed a Dispute Resolution Agreement stating in part that "any dispute, regardless of when it arose, shall be resolved, at your option or ours, by arbitration in accordance with this agreement." The Doyles sued in circuit court to recover damages, on behalf of a putative class. Finance America filed a motion to dismiss and motion to compel arbitration, which were granted by the circuit court.
Among other things, the Doyles contended that arbitration should not have been mandatory because a condition precedent had not been met, because theirs was a class action suit and such suits were excluded from the agreement, because arbitration was permissive rather than mandatory, and because the agreement was unenforceable as procedurally and substantively unconscionable.
The Court of Special Appeals disagreed and affirmed the decision of the circuit court.
The opinion is available in PDF.
Friday, January 26, 2007
Harby v. Wachovia Bank (Court of Special Appeals)
Filed January 26, 2007. Opinion by Judge Sally D. Adkins.
Issue: Are "no acceptance" and “no consideration” viable defenses to enforcement of an arbitration clause contained in a bank's depositary agreement?
Held: No. A depositor who signs a signature card or other agreement adopting the terms of a separate agreement containing an arbitration clause is bound by that arbitration clause. Judgment of the circuit court affirmed.
Facts: The court-appointed guardian of the property of a minor opened a bank account and deposited funds for the benefit of the minor. To open the account, the guardian signed a document that referred to and incorporated the terms of a depositary agreement containing a mandatory arbitration clause. The guardian did not sign the depositary agreement separately. The guardian then allegedly defalcated portions of the fund. The guardian was replaced by a substitute guardian who sued the first guardian and the bank in circuit court.
The bank moved to enforce the mandatory arbitration clause and asked that the litigation be stayed or dismissed. The plaintiff opposed the motion, raising as grounds 1) no acceptance of the clause, and 2) no consideration given for the clause. The circuit court enforced the arbitration agreement and stayed the litigation. The plaintiff appealed.
On appeal, the Court of Special Appeals identified and discussed a line of precedent establishing the principle that a depositor who accepts the terms of a separate deposit agreement by executing a signature card or other agreement is bound by the terms of the deposit agreement, even if the deposit agreement is not separately executed. The Court held that the guardian was bound by the terms of the second agreement, and that the substitute guardian was bound by the acts of her predecessor. The Court rejected the argument that, to be enforceable, the arbitration clause must be specifically referenced in the agreement signed by the depositor.
The plaintiff argued, alternatively, that the arbitration agreement was unenforceable for lack of consideration, because it remained subject to unilateral modification by the bank under the terms of the depositary agreement. The plaintiff argued that the bank's unilateral right to change the terms meant it could "opt out" of arbitration at its discretion. This rendered the mutual promise of arbitration "illusory," and thus inadequate as consideration for a binding agreement. The Court held that the bank's agreement to provide 30-days notice of any change to the agreement meant that the bank was bound to the terms for at least 30 days. The Court held that this was sufficient consideration to support a binding agreement to arbitrate.
Accordingly, the Court affirmed the decision of the Circuit Court.
A copy of the opinion is available in PDF.
Issue: Are "no acceptance" and “no consideration” viable defenses to enforcement of an arbitration clause contained in a bank's depositary agreement?
Held: No. A depositor who signs a signature card or other agreement adopting the terms of a separate agreement containing an arbitration clause is bound by that arbitration clause. Judgment of the circuit court affirmed.
Facts: The court-appointed guardian of the property of a minor opened a bank account and deposited funds for the benefit of the minor. To open the account, the guardian signed a document that referred to and incorporated the terms of a depositary agreement containing a mandatory arbitration clause. The guardian did not sign the depositary agreement separately. The guardian then allegedly defalcated portions of the fund. The guardian was replaced by a substitute guardian who sued the first guardian and the bank in circuit court.
The bank moved to enforce the mandatory arbitration clause and asked that the litigation be stayed or dismissed. The plaintiff opposed the motion, raising as grounds 1) no acceptance of the clause, and 2) no consideration given for the clause. The circuit court enforced the arbitration agreement and stayed the litigation. The plaintiff appealed.
On appeal, the Court of Special Appeals identified and discussed a line of precedent establishing the principle that a depositor who accepts the terms of a separate deposit agreement by executing a signature card or other agreement is bound by the terms of the deposit agreement, even if the deposit agreement is not separately executed. The Court held that the guardian was bound by the terms of the second agreement, and that the substitute guardian was bound by the acts of her predecessor. The Court rejected the argument that, to be enforceable, the arbitration clause must be specifically referenced in the agreement signed by the depositor.
The plaintiff argued, alternatively, that the arbitration agreement was unenforceable for lack of consideration, because it remained subject to unilateral modification by the bank under the terms of the depositary agreement. The plaintiff argued that the bank's unilateral right to change the terms meant it could "opt out" of arbitration at its discretion. This rendered the mutual promise of arbitration "illusory," and thus inadequate as consideration for a binding agreement. The Court held that the bank's agreement to provide 30-days notice of any change to the agreement meant that the bank was bound to the terms for at least 30 days. The Court held that this was sufficient consideration to support a binding agreement to arbitrate.
Accordingly, the Court affirmed the decision of the Circuit Court.
A copy of the opinion is available in PDF.
Thursday, January 4, 2007
Prince George's County v. Fraternal Order of Police (Ct. of Special Appeals)
Filed January 4, 2007--Opinion by Judge Timothy Meredith.
In 2004, the P.G. County Chief of Police established a new promotion policy, based on the "Rule of 3," wherein promotions would be an officer selected by the Chief from among the top three eligible candidates, rather than promoting the top scoring candidate as had been the previous practice. The local FOP chapter ("FOP 89") filed a grievance, claiming a violation of the collective bargaining agreement. The appeal was denied by the Labor Commissioner. FOP 89 then filed a request for arbitration of the denial, and in March of 2005 the arbitrator found a violation of the collective bargaining agreement, required the promotion of the highest candidate on the eligibility list, and ordered the retroactive promotion of any officer passed over by out-of-order promotions.
Prince George's County (the "County") petitioned the local Circuit Court to vacate the arbitration award; the Circuit Court affirmed the arbitrator's decision, whereupon the County appealed.
On its own, the Court of Special Appeals (the "Court") raised the issue of mootness, since the collective bargaining agreement at issue had expired in 2005, thus rendering the matter at issue moot. The Court noted an exception to the rule that courts are not to decide academic or moot questions where there is no longer an existing controversy, if there is a public benefit to be derived from deciding a matter of important public interest raised, for the guidance of courts and litigants in the future. The Court noted that the collective bargaining agreement at issue here had subsequently been renegotiated, and that the County had resisted a clarification of the section at issue urged by FOP 89 and instead the existing language had been continued. Thus, the Court found justification to address the issues raised, even though moot in this case.
The Court had little difficulty finding that arbitration was required in this case, noting that arbitration is a favored remedy, and that in the case of ambiguity over the scope of matters subject to arbitration, the arbitrator and not the courts should initially determine the matter. Upon review, the Court found the dispute was within the scope of the arbitration provisions of the collective bargaining agreement.
Turning to the arbitration award itself, the Court noted that mere errors of law or fact would not ordinarily justify vacating or refusing to enforce an arbitration award, but only if the award is base on fraud, misconduct. bias, prejudice, corruption or lack of good faith on the part of the arbitrator, or if the award is contrary to a clear public policy, or if beyond the scope of the issues submitted or failing to consider all matters submitted, or to correct a mistake of form such as an evident miscalculation of figures. The Court found nothing to support the contention that the award was a mistake so gross as to work a manifest injustice or contained a palpable mistake of law or fact, or that the arbitrator's decision was completely irrational. Contrary to the County's contention that provisions of county law supersede, interpret, or limit the interpretation of the collective bargaining agreement, the Court found that the terms of such collective bargaining agreements are explicitly incorporated into and supersede inconsistent provisions of the county law.
Although the technical ruling of the Court was a dismissal on the basis of mootness, after considering the merits of the issues raised the Court upheld the arbitration award on all counts.
The full opinion is available in WordPerfect and PDF.
In 2004, the P.G. County Chief of Police established a new promotion policy, based on the "Rule of 3," wherein promotions would be an officer selected by the Chief from among the top three eligible candidates, rather than promoting the top scoring candidate as had been the previous practice. The local FOP chapter ("FOP 89") filed a grievance, claiming a violation of the collective bargaining agreement. The appeal was denied by the Labor Commissioner. FOP 89 then filed a request for arbitration of the denial, and in March of 2005 the arbitrator found a violation of the collective bargaining agreement, required the promotion of the highest candidate on the eligibility list, and ordered the retroactive promotion of any officer passed over by out-of-order promotions.
Prince George's County (the "County") petitioned the local Circuit Court to vacate the arbitration award; the Circuit Court affirmed the arbitrator's decision, whereupon the County appealed.
On its own, the Court of Special Appeals (the "Court") raised the issue of mootness, since the collective bargaining agreement at issue had expired in 2005, thus rendering the matter at issue moot. The Court noted an exception to the rule that courts are not to decide academic or moot questions where there is no longer an existing controversy, if there is a public benefit to be derived from deciding a matter of important public interest raised, for the guidance of courts and litigants in the future. The Court noted that the collective bargaining agreement at issue here had subsequently been renegotiated, and that the County had resisted a clarification of the section at issue urged by FOP 89 and instead the existing language had been continued. Thus, the Court found justification to address the issues raised, even though moot in this case.
The Court had little difficulty finding that arbitration was required in this case, noting that arbitration is a favored remedy, and that in the case of ambiguity over the scope of matters subject to arbitration, the arbitrator and not the courts should initially determine the matter. Upon review, the Court found the dispute was within the scope of the arbitration provisions of the collective bargaining agreement.
Turning to the arbitration award itself, the Court noted that mere errors of law or fact would not ordinarily justify vacating or refusing to enforce an arbitration award, but only if the award is base on fraud, misconduct. bias, prejudice, corruption or lack of good faith on the part of the arbitrator, or if the award is contrary to a clear public policy, or if beyond the scope of the issues submitted or failing to consider all matters submitted, or to correct a mistake of form such as an evident miscalculation of figures. The Court found nothing to support the contention that the award was a mistake so gross as to work a manifest injustice or contained a palpable mistake of law or fact, or that the arbitrator's decision was completely irrational. Contrary to the County's contention that provisions of county law supersede, interpret, or limit the interpretation of the collective bargaining agreement, the Court found that the terms of such collective bargaining agreements are explicitly incorporated into and supersede inconsistent provisions of the county law.
Although the technical ruling of the Court was a dismissal on the basis of mootness, after considering the merits of the issues raised the Court upheld the arbitration award on all counts.
The full opinion is available in WordPerfect and PDF.
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